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Getting redundancies right

Posted: 16 October 2020

In this blog we discuss the importance of managing a difficult process of redundancy fairly and properly.

When considering making redundancies, businesses are legally obligated to:

  • Ensure there’s a genuine redundancy situation
  • Consider alternatives that could reduce or avoid redundancies
  • Follow a fair process.

It’s imperative that employers follow a fair redundancy process. For a process to be fair, an employer must:

  • Warn and consult employees about the proposed redundancies
  • If only some staff will be made redundant, identify an appropriate pool of potentially redundant employees and choose them using proper selection criteria
  • Consider any suitable alternative employment within their business
  • Follow any contractual redundancy procedures they may have.

In addition, with some employees working remotely, it’s up to the employer to find a way around this to ensure that a fair process is followed. For example, where required, meetings may need to be carried virtually instead.

Employers need to use a proper selection criteria to score those at risk, to decide who’ll be made redundant.

When creating criteria, as far as possible, employers should use objective factors that are relevant to business needs and can be verified by available information (e.g. appraisals, length of service, disciplinary or attendance records). This information should be accurate. 

To not discriminate against employees, whether directly or indirectly, on the grounds of sex, sexual orientation, race, age, disability, religion/belief (England, Wales and Scotland) or religious belief/political opinion (Northern Ireland).Employers should remember:

  • To avoid subjective factors or personal opinions (e.g. company values, future potential), unless they’re confident they can be applied objectively.
  • They can’t use a simple ‘last in, first out’ approach – it could be discriminatory. It may be possible to make this one factor amid other selection criteria, or if all other criteria have been applied and there’s a tiebreak situation. They should get legal advice first, though.
  • They can’t select employees because they’re part-time or on fixed-term agreements: such employees are legally protected from less favourable treatment.
  • To not select employees based on salary: it’ll likely be indirect age discrimination.
  • To only include performance in the selection criteria if they’ve got records that support it or if they can score it using measures that aren’t subjective.
  • If they want to include attendance in the criteria, exclude the following types of absence (and make a note that they’ve done so):
    - Maternity or paternity leave
    - Absence due to disability (either their own or one of their dependants)
    - Absence due to injury suffered at work (unless they can show they’ve consistently applied this to all employees).
  • To not discriminate against employees, whether directly or indirectly, on the grounds of sex, sexual orientation, race, age, disability, religion/belief (England, Wales and Scotland) or religious belief/political opinion (Northern Ireland).

 

If there’s a dispute, they must be able to prove that their selection criteria are fair.

Selection criteria must also be applied fairly. Obvious inconsistencies are likely to lead to an Employment Tribunal deeming the redundancy unfair. 

Employers can find information on redundancy law on reputable websites such as ACAS.co.uk1 and GOV.UK2. In addition, they may have access to unlimited legal advice as part of their legal expenses policy.

Disclaimer – all information in this blog was correct at the time of publishing and is for informative purposes only.

Source: Epoq (2020)

https://www.acas.org.uk/manage-staff-redundancies

https://www.gov.uk/staff-redundant/redundancy-consultations